Social Economic Zones Analysis Essay Sample
It’s been five old ages since the SEZ Act 2005 came into being. Over 580 SEZ blessings. much existent estate guess. half-a-dozen farmers’ protests. and an economic lag subsequently. it is clip for the Ministry of Commerce to acknowledge that the policy has been a moist squib on the economic forepart. Developers who were falling over each other to acquire their SEZ plans approved seem to be looking for greener grazing lands. as they now line up to acquire their SEZs denotified or withdrawn. Many others continue to seek extensions to their in-principle blessings. even as they experience jobs accessing land or coming up with the needed fundss. In October 2010. the Board of Approvals at the ministry. which was uncluttering more than 40 undertakings an hr a few old ages ago. did non have a individual proposal! The Direct Tax Code Bill 2010. tabled by the Ministry of Finance in the last session of Parliament. would look to be the latest wrench in the plants.
The hereafter of revenue enhancement freedoms — the most attractive characteristic of the SEZ policy for new units in SEZs — looks black as the DTC threatens to retreat location-specific freedoms from the dividend distribution revenue enhancement or minimal alternate revenue enhancement for SEZs in the state. Further. the DTC has proposed a permutation of the profit-based inducements prevailing under the bing commissariats of the Act with investment-based tax write-offs for SEZs notified on or after April 1. 2012. Though the Bill tabled in Parliament this August is a moire down version of the original bill of exchange. it does set the focal point back on the concerns of the Ministry of Finance in relation to gross losingss involved in SEZ development in India.
The finance ministry expressed its apprehensivenesss over revenue enhancement sops to SEZs when the Central SEZ Act was passed in 2005. Harmonizing to the Parliamentary Standing Committee’s 83rd study. presented in the Rajya Sabha in June 2007. the Ministry of Finance estimated a gross loss of Rs 175. 487 crore from revenue enhancement vacations granted to SEZs. for the period 2004-05 to 2009-10. The finance ministry. which collated the revenue enhancement filings of 410. 451 companies ( including SEZs ) in 2009. found that there was a crisp addition in gross foregone by the authorities on history of certain freedoms — including accelerated depreciation. which shot up from Rs 7. 396 crore in 2006-07 to Rs 12. 946 crore in 2007-08. and farther to Rs 14. 344 crore in 2008-09.
The concerns of the finance ministry were corroborated by the Comptroller & A ; Auditor General’s public presentation audit study tabled in Parliament in 2008. The CAG reappraisal brought out systemic every bit good as conformity failings in relation to SEZs that caused gross losingss to the melody of Rs 246. 72 crore. Furthermore. the CAG threw visible radiation on the absence of enabling commissariats. ensuing in Rs 1. 724. 67 crore of gross foregone. or unrecoverable.
More late. in January 2010. the Central Board of Excise and Customs ( CBEC ) recommended an inspection and repair of the Particular Economic Zone ( SEZ ) Act 2005. stating it had detected gross misdemeanors of responsibility and revenue enhancement grants doing it to endure a gross loss of Rs 175. 000 crore to day of the month. The figures put out by assorted sections have frequently been termed “notional” or exaggerated by the Ministry of Commerce and economic analysts. But a simple investigation. vide a series of RTI applications with the Gujarat authorities. revealed that the gross loss figures in a smattering of SEZs ran into hundred thousand and crores of rupees ( the RTI applications were filed with the following sections in August and September 2009 — Director General of Audit. Central Revenues. Sr/Deputy Accountant General. Office of Accountant General and Gujarat Industries Commissionerate. by Manshi Asher ) . Here are some of the figures: Rs 5. 066. 89 crore has been foregone as responsibility on import procurance between 2006-07 and 2008-09 in the instance of the Reliance Jamnagar SEZ. Between 2007-08 and 2008-09. the SEZ besides availed of Rs 7. 99 hundred thousand in freedom of cast responsibility. Rs 39. 760 in fee freedoms.
Between 2007-08 and 2008-09. the Dahej SEZ has foregone Rs 14. 06 crore as cardinal excise responsibility on DTAs ( Domestic Tariff Areas. or countries outside an SEZ ) . Between 2006-07 and 2008-09. the SEZ has besides foregone imposts responsibility worth Rs 116. 10 crore. The Mundra Port and SEZ and Adani Power SEZ combined have led to Rs 937. 46 crore foregone as responsibility freedoms between 2006-07 and 2008-09. The twin SEZs have besides together got freedoms deserving Rs 10. 2 crore in stamp responsibility and enrollment fees combined. in 2008-09 alone. Between 2005-06 and 2008-09. Rs 805. 65 crore was foregone as freedoms on imposts responsibilities in the Kandla SEZ. And yet the Ministry of Commerce has chosen to brush aside such findings and flip the ‘success’ of SEZs on investing and export figures. There are cardinal defects in trusting simply on statistics while disregarding the flight. tendencies and nature of exports and investings. which is exactly what the commercialism ministry has done. Let’s take exports.
While the dumbfounding figure of Rs 2 hundred thousand crore exports from SEZs till March 2010 is used to foreground the public presentation of SEZs in general. it is of import to analyze this figure. About 50 % of these exports came from the same smattering of functional zones in the province of Gujarat mentioned above. Besides. it may be noted that Gujarat’s functional SEZs. including Kandla. Mundra. Jamnagar. Surat and Dahej. which contribute to the exports. existed or were undertakings that were planned and under building before the cardinal and province SEZ Acts were put in topographic point ; hence their success can barely be attributed to the SEZ policy of 2005. Further. a individual SEZ ( Reliance Jamnagar ) contributed Rs 75. 000 crore to the all-India figure. and this degree of public presentation can non be expected of all SEZs. Another of import dimension pointed out by analysts in several taking concern dailies is recreation of exports from DTAs to SEZs. In other words. the rapid addition in exports from SEZs has been accompanied by a bead in exports from non-SEZ countries. bespeaking a possible displacement of units from outside SEZs into SEZs — a tendency that merits serious probe.
The issue of positive NFE ( Net Foreign Exchange ) and physical exports is besides controversial. as Rule 53 of the SEZ Act. which considers sale to DTAs from SEZs. is deemed exports. In fact. it was the CAG study of 2008 that observed that “22 SEZ units had been accomplishing the prescribed ‘positive’ NFE chiefly though domestic gross revenues and this defeats one of the sub-objectives of the strategy which was to augment existent exports. While an overall export of Rs 7. 149. 23 crore was made by these 22 units. the existent export content was merely Rs 1. 999. 27 crore ( 28 % ) ; the staying Rs 5. 149. 96 crore ( 72 % ) related to DTA earnings” . An illustration is the Nokia SEZ in Tamil Nadu. which the commercialism ministry cites as a successful SEZ. However. an independent survey published by Madhumita Dutta. an militant and research worker based in Chennai. corroborated the determination that “domestic gross revenues of Nokia’s nomadic phones from the SEZ count towards exports” thanks to loopholes in the statute law.
Besides. apart from absolute figures. the MoC has no disaggregated informations on exports from SEZs. In fact. in response to an RTI application filed last twelvemonth. seeking the Net Foreign Exchange ( NFE ) earned from SEZs. the ministry clearly said that “no such informations is maintained in the department” . The extent of benefits drawn by developers ( largely existent estate and substructure companies ) in the name of export augmentation. and the revenue enhancement freedoms taken together. in itself seem hideous. Common sense suggests that this. coupled with other advantages like the measly monetary values at which authorities and agricultural land has been diverted to developers. and the societal and environmental costs of these undertakings. consequences in cumulative losingss to the public treasury that far outweigh the benefits.
It remains to be seen whether Parliament debates the Direct Tax Code Bill 2010. and if so. confronts the SEZ issue head-on. Given the fact that five old ages ago the SEZ Bill was passed in both houses of Parliament in a individual twenty-four hours. with no existent treatment. the opportunities of a argument now on the intent and public presentation of the policy remain slender. The socio-political branchings of SEZs are already being questioned ; the clip has come to reexamine the policy for its economic sense. After all. the people of India deserve to cognize the existent cost of such development. And who is paying it. ( Manshi Asher is a researcher-activist )
